EUR-USD prediction next week april 30- may 4 2012

forex trading outlook today EUR-USD prediction next week april 30- may 4 2012, technicals bearish for next week, economic outlook next week ; The ECB will hold a monetary-policy meeting, and on Sunday (6 May) a presidential election will be held in France and a parliamentary election in Greece. It will be an eventful week and next week will be the best bet for a week which will boost the markets slightly again. Volatility since new year has almost collapsed (see graph). Lower volatility leads to cheaper options, and currently options are at their lowest level since before the financial crisis – we do not anticipate that this will continue.

Spanish 10-year yield is up 9 bp and the spread to Germany widened 11 bp. The euro initially traded lower on the news but has reversed most of the overnight losses and is now flat against the dollar. 1.3250 area is providing near-term resistance for EUR/USD. We feel the euro should be sold into rallies ahead of next week’s key economic data and political events, including PMIs, ECB meeting, and the ongoing political cycle.

From Europe we received poor confidence data which once again underline that Europe is in a negative spiral. In Italy, the business confidence indicator showed a level which is below the level we saw during the financial crisis (on Wednesday, we saw the same for consumers) – all in all, bad news for one of Europe’s sore spots, and combined with today’s downgrade of Spain’s rating, we see euro weakness ahead.

EU: S&P Affirms Ireland Ratings at BBB+/A-2, with negative outlook. S&P said negative outlook on long-term ratings reflects view that there is at least 1 in 3 chance S&P could lower rating in 2012 or 2013. S&P rating could come under pressure if Ireland loses its access to funding from ESM after the referendum on May 31, 2012.

Europe has capacity to handle its debt criss by itself. "Mistake" to think US not contributing to help Europe because it is doing so by providing swap lines. US does not have capacity to save big banks from their mistakes. "Biggest overwhelming risk" to the US economy is divided political system.

Gross domestic product, the value of all goods and services produced in the U.S., rose at a 2.2 percent annual rate in the first quarter, Commerce Department figures showed today in Washington. That followed a 3 percent pace in the prior quarter and compared with the 2.5 percent median forecast of economists surveyed by Bloomberg News.

U.S. jobless claims fell to 388,000 last week from a revised 389,000 the prior week, the highest since early January, according to Labor Department data yesterday. An index of executive and consumer sentiment in the 17-nation euro area slid to 92.8 from a revised 94.5 in March, a report by the European Commission in Brussels showed.

Yesterday, Chicago Fed Activity (March) and Kansas City PMI (April) were released and both were below expectations. Generally, the activity indices do not bode well for the ISM for manufacturing industry due next week. Jobless claims rose more than expected, but on the other hand we once again saw signs of stabilisation in the housing market since home sales were a positive surprise. Generally, the indicators indicate higher probability that we will see spring fatigue in the US like in recent years. If this become a reality, we anticipate that risk aversion will dominate and send the dollar higher.

EUR/USD Technicals next week april 30- may 4 2012
technicals bearish for next week and ranging – Spot is unchanged on the week. We retain our bearish view. First, the RSI has begun to tick down from the highs, suggesting that it has reached a top. Yesterday, there was also a doji candlestick indicating a turning point. Bandwidth is extremely low, suggesting it is likely to be locked in a range. Our target is 1.3050 (just above the lower Bollinger band).

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